What a Few 'Dead Rats' Taught Me About Money
My dad's timeless advice... My 10-year-old brain never forgot this investing lesson... What a few 'dead rats' taught me about money... A 5X return... How to add real estate exposure to your portfolio...
'Son, let me tell you about the only thing that goes up'...
I (Thomas Carroll) was 10 years old. My family – my parents, grandparents, cousins, aunts, uncles, and a few friends – were enjoying our annual camping trip in the Adirondack Mountains.
Each summer, we stayed on one of the picturesque lakes in upstate New York for two to three weeks.
We spent our days hiking, biking, swimming, fishing, eating, fighting mosquitos, and occasionally chasing away a black bear. It was a glorious time to be a 10-year-old boy in my family.
This particular year, our group was staying on the banks of Lewey Lake... a small body of water at the south end of the larger Indian Lake. Both lakes are about 50 miles west of the iconic Lake George.
Each morning, my Uncle Dan planned a daily hike for all of us cousins. They were great adventures. And for our parents, it served as a much-needed energy burn for the kids.
On this day, we planned to conquer Chimney Mountain...
Uncle Dan had picked out a three-hour hike to the top, where amazing rock formations could be found, climbed, and photographed. We also toured some small caves that punctured the peak. Ice was in there. How amazing.
My dad and I were leading the pack on the trail that day. I cherished these times with my dad... He would often share a story or piece of advice about the world. Many of these stories stuck in my memory to be called upon as I got older.
"Tom, you can always count on buying a house."
Today, the talk focused on real estate... My father and grandfather had each owned a home, watching it appreciate in value over time. It literally created their financial futures.
"You see, property like a house goes up in value over time," I remember my dad telling me. "This is different from other things, like cars. The money you spend on it will grow... When you sell it, you will have more money than when you started."
It sounds hokey, but I recall this talk like it was yesterday. For some reason, it made perfect sense to my 10-year-old brain... perhaps foreshadowing my career as a market analyst.
On that day, I realized that buying a house would be a goal when I was a "grown-up."
The last decade has taught us some valuable lessons about real estate...
While my dad always made money on his real estate purchases, hundreds of thousands of people lost money in the financial crisis of 2008 and 2009. Make no mistake about it... my dad's adage did not hold up during that time period.
But the spirit of his advice remained quite true...
Real estate is a hard asset. With the right property location, careful selection, and a bit of luck, real estate investing can be one of the most stable, reliable sources of wealth creation for an individual. And individual investors can use plenty of investment vehicles.
Moreover, investing in real estate can serve as a hedge against the weakening value of the U.S. dollar and "easy money" policies of the Federal Reserve that aren't going away anytime soon. As my colleague Dr. Steve Sjuggerud put it recently in a new special report for his True Wealth Real Estate subscribers...
The U.S. government's financial position is the worst it has been in years. But Washington won't let the U.S. default on its debts. Instead, it will "inflate" them away through money printing...
The Federal Reserve has repeatedly stated it will print money – as much as necessary – to stimulate our economy. The obvious result is more paper dollars out there. And the next result is that a paper dollar is worthless.
Unless we see some dramatic changes in government spending, a major U.S. crisis appears inevitable.
But before the crisis arrives, you need to get a huge portion of your wealth OUT of the U.S dollar... and INTO investments that will maintain and increase their value as the dollar declines.
Real estate is one of these investments... and is perhaps the most lucrative of them all.
I began investing in real estate during the gentrification of the area near Baltimore's Inner Harbor...
During the 1990s, my wife and I owned three separate rowhomes – the style that Baltimore is known for.
One was a modern build, while the others dated to the 1820s. These were ideal purchases to learn the buying process, contribute sweat equity, and manage tenants.
If you've ever been to Baltimore, our homes were in the historic Otterbein and Federal Hill neighborhoods, just south of the Inner Harbor.
The first two were pretty well put together... We only needed to add some fresh paint and do some tile work, minor plumbing, and maintenance.
However, the final (and my favorite) was a small home on top of the actual Federal Hill. It had not been updated since the 1970s. My wife and I dove right into the challenge... We made many trips to Home Depot.
As we took this place apart, we found some great stuff... For example, we discovered old newspapers from the 1940s, crazy wallpaper, and a couple of perfectly preserved rat or mouse skeletons still clinging to the brick foundation.
The "dead rat" image is a good analogy for this fixer-upper story.
It was quite a learning experience...
We installed windows, hardwood flooring, and did a lot of painting.
We even installed an antique tin ceiling in the kitchen that was popular at the time of its original build. This is similar to the pressed-tin squares at many older pubs around town.
The crowning addition (which we did not do ourselves!) was a large rooftop deck. This allowed for sweeping views of the Baltimore skyline. It was great on the Fourth of July.
We also welcomed our first child in this home as well. But once that happened, we wanted more than its 1,500 square feet to raise our growing family. It was time to move out of the city and onto our next adventure in the suburbs.
Fortunately, we chose our neighborhoods, properties, and future tenants wisely. And the market was hot, much like Steve and his research team have described today's overall U.S. real estate market over the past few weeks.
Many young professionals in Baltimore were looking for homes in these fun and safe neighborhoods.
These three homes represented most of our net worth at the time. And they firmly established our financial grounding as we both grew into our careers, raised a family, and took on other responsibilities.
The rental income and eventual sale of these homes funded our primary homestead in suburban Baltimore, paid off all our student loans and credit-card debt, and established a retirement nest egg.
Considering the leverage involved (again, today, there's a great opportunity to put leverage to work with loans available at rock-bottom rates), we earned about five times our original cash outlay.
Today, real estate remains a primary part of our investing strategy...
Roughly 40% of our net worth remains in real estate...
Just like our stocks and bonds, I'm constantly looking for opportunities in the ever-changing real estate market. But it can be difficult...
Like a lot of folks, real estate is not my primary focus. As regular Digest readers know, I'm a longtime health care sector analyst, and I write our Cannabis Capitalist newsletter.
The point is, I'm sure I've missed many opportunities in real estate over the years. I say "I'm sure" because I know what investing in real estate at an early age did for me in the long run – and what it can do for everyday investors, if only they know what to do... where to look... and who to trust.
The good news is, we're now sharing this knowledge in detail with you...
When I heard that Steve was putting together exciting new research on the real estate market, my interest was piqued.
As we've shared with you in recent weeks in the Digest, Steve is also a lifelong real estate investor. It has been a cornerstone of his wealth management over the years as well – and he has me beat on its place in his investment portfolio...
You may know him for his stock advice, but Steve has around 75% of his investable net worth in real estate.
And as we've shared, he says this market has so many tailwinds going for it today...
Record-low interest rates have made housing more affordable. And the data that Steve and his research team have shared recently show that demand is high and supply is just about average.
If you're interested in growing your wealth by owning real estate – be it your own home or a rental property – now is a great time to do it.
You can add real estate exposure to your portfolio in so many different ways...
You don't have to do a fixer-upper like my wife and I did, but you can get similar results.
Things like "crowdfunding" allow individual investors to get involved in big-time residential or commercial real estate projects without the hassles of running to Home Depot and dealing directly with tenants like we did.
Steve talks more about that in his presentation that's linked below. He recently sat down with a panel of real estate experts to precisely detail these exciting opportunities.
Steve also shared what he has learned in his decades of real estate investing, what opportunities he sees in our pandemic economy, and what trends will likely last if or when we ever get to a post-COVID-19 world.
Click here to learn more right now. But don't delay... Steve's presentation is scheduled to go offline tomorrow. (And Stansberry Alliance Partners... as part of your lifetime membership, you can access all of Steve's new real estate ideas at no additional charge right here.)
The Best Way to Profit From a Housing Boom
When you combine today's economic conditions with low mortgage rates, the housing market is ready to soar, True Wealth Real Estate editor Dr. Steve Sjuggerud tells our colleague Jessica Stone...
Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and follow us on Facebook, Instagram, and Twitter.
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In today's mailbag, feedback on the race for a COVID-19 vaccine that we discussed in yesterday's Digest. What are your thoughts? Do you have any investing lessons from your childhood to share like Thomas did today? Send us an e-mail at feedback@stansberryresearch.com.
"I love Stansberry Research, well worth the Alliance membership. Just finished The Stansberry Digest June 29, 2020 about Covid-19. I appreciate the optimism and urgency for an effective Covid vaccine.
"As a physician for the past 40 years I am amazed that no one, including experts such as Dr. Fauci, and Stansberry's own science biotech expert Dave Lashmet have failed to tell the public that in the history of medicine there has never been an effective vaccine against a 'corona' virus.
"The common cold is a corona virus, there has been years of intense research to come up with a vaccine against the common cold corona virus with plenty of monetary reward, yet still no vaccine to a corona virus. Those that are anxiously waiting for the Covid vaccine should not hold their breath." – Stansberry Alliance member Michael P.
"This report has got it all wrong – why do you have all this blind faith in a vaccine? Why do you think it is so urgent?
"The man who [helped develop] the vaccine for SARS-1 says 'you need time to evaluate these vaccines to see if they actually work ... we have to be mindful of the fact that the record is four years and trying to do this in less than two is going to be a struggle' and 'even if a vaccine were found to be safe and effective in record time, he's still not sure it would be a silver bullet.'
"Vaccine development should not be a race. The human species is not in danger of extinction from this virus which has a FR of 0.26%, around the same rate as a bad flu. It is the unprecedented hysterical over reaction and lockdowns that are the danger to human health. Vaccine development takes years because it has to be tested for safety before it can be approved.
"Far more deaths will come from a rushed unsafe and inadequately tested vaccine then will ever be done by the Covid-19 virus." – Paid-up subscriber Steven I.
Happy investing,
Thomas Carroll
Baltimore, Maryland
June 30, 2020